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Oil Flash Crashes To Gundlach's Geopolitically "Terrifying Levels"
Forced liquidation... capitulation ... contract roll... or "liquidity provision" gone awry? You decide.
As Nanex puts it "you said you needed to go faster to provide liquidity. This chart determined that was a lie."
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And don't forget: in a January interview with FuW, DoubleLine's Jeff Gundlach explained his concerns about the oil market not being "unequivocally good" for everyone...
Question: The crash in the oil market is already causing jitters in the financial markets around the globe. What is your take on that?
Gundlach: Oil is incredibly important right now. If oil falls to around $40 a barrel then I think the yield on ten year treasury note is going to 1%. I hope it does not go to $40 because then something is very, very wrong with the world, not just the economy. The geopolitical consequences could be – to put it bluntly – terrifying.
Gundlach is right historically... large and rapid rises and falls in the price of crude oil have correlated oddly strongly with major geopolitical and economic crisis across the globe. Whether driven by problems for oil exporters or oil importers, the 'difference this time' is that, thanks to central bank largesse, money flows faster than ever and everything is more tightly coupled with that flow.
So is the 50%-plus YoY drop in oil prices about to 'cause' contagion risk concerns for the world?
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$3xs tomorrow. Terrible. No bid. Death spiral.
One of Zero Hedge's greatest contributions to our financial knowledge has been including NANEX information when "they" are manipulating.
+ a gazillion
Am I wrong or weren't we filling the SPR when oil was $110/bbl?
Benoit, you pushed the wrong button!!!
nice...can we now haz 1.25 gas again please?
September CL is expiring. Nothing to see here.
Deflation is beautiful. Can you imagine if interest rates were at 6 percent. Oil would be 20 dollars a barrel and gold would be under 150.
Soon Assad will invade Iraq with a battalion of brand new T-90's.
The states are saved! They will tax the fuck out of gas and all those teachers firefighters cops and govt workers will still be able to to get their 100 k per year retirements....
It would be nice if the gasoline prices reflect the oil price.
That's OK. We paid for it using (giggles) Paper!
Phase 1: Collect Underpants...
@ Stuck
Thank you Oblamo
"...Am I wrong or weren't we filling the SPR when oil was $110/bbl?..."
I had the same reaction a couple of years ago. Thankfully, the SPR is filled with production royalties from Gulf of Mexico producers. Whatever percent of the output of Gulf wells is simply delivered to the SPRs when they're filling them up. The oil itself doesn't physically have to come from the Gulf wells - the producers are simply obligated to deliver the royalties as a certain grade of crude. I'm sure the taxpayer is getting screwed in an unimaginable number of ways, but we don't technically pay $ per bbl for SPR oil at the prevailing price when it's being filled.
WTF!
You think the gooberment would buy when oil is depressed? Seriously?
( Which of course means they are going to dump oil on the "market" any day now.)
It's leveraged positions being liquidated. Margin called are coming and it will be like a snowball gaining steam until it bottoms. Too many knife catchers leveraged on the bounce.
^^ This.
Fed turned off the speculation spigot so no more free money chasing commodities.
Well, oil is a relatively small market, so... it probably was some Indian in his mother's basement and a fat finger.
Yes, and the authorities over in NY & Chi-town will not sleep until that problem is solved.
They're ON it bro.
LMAO
How much is HFT software again? I need to compete moar better.
I can arrange for you to get a small computer trading room in New York situated very near the NYSE for only 1 million dollars a square foot rent per month.
Well, uhmmm its just a 4 x 6 toilet stall in the men's bathroom so the rent is only 24 million dollars a month. You gotta set up your own computers. But just think... you'll never have to leave momentarily to relieve yourself.
This is terrific. I love it.
I can't wait to see how the credit markets react to this. ;-)
deer in headlight look
Dear God Yen I do hope you can make money in this. We clueless penny ante players have run long ago. Funny to think at one time we made some pretty good scores in options with some sound research and knowing each other's industries. Now we just peer from the side lines.
Miffed;-)
Here's a good starting point Miffed.
Top 18 Inverse Bonds ETFs
shorting corporate debt - Google Search
I've got to admit, my trades are a bit more complex, but this should point you in the right direction.
I'm not shilling for anyone, but this page is helpful for people trying to understand shorting the markets.
Thanks Yen,
If you ever need any microbiological advice don't hesitate to ask. At least my field, though challenging, resists phony human manipulations.
Miffed;-)
My pleasure. :-)
@Yen what is your long hedge?
It's commodity based.
I loaded up on SJB a few weeks ago. I'm hoping it will pay off nicely over the next 5 or 6 months. SJB combined with oil tanker stocks and a dose of EDV ought to do the trick.
Another scary article. Enough for a month in a day.
Tell me about it. I'm going to smoke pot for a month tonight.
Puff, puff, pass...
His middle avatar is Beau.
I'm scared mommy
It's OK. We're all scared sweetie.
Was this at the open of the Guam market?
Just popped in to read this article; now it's back to sharpening my machete in order to make my way through the thick groves of green shoots.
Gundlach: Oil is incredibly important right now. If oil falls to around $40 a barrel then I think the yield on ten year treasury note is going to 1%. I hope it does not go to $40 because then something is very, very wrong with the world...
Earth to Gundlach, the 10Y is going to 1% no matter what oil does, no matter what china does, no matter what anyone does. and yes, there is something terrible wrong with the world but it isn't what you think it is.
Oil God Andy Hall has started to staple himself in his garage. Hsi sweet wife is calling 911.
Excrement is going to contact the rotating blades at some point, may as well get it over with.
The excrement contacted the rotating blades long ago.
It has not been that bad of a shit storm yet.
But that main crock of shit is falling over...fast.
It reminds me of the time when I was on this Construction Crew, in the heat of a Summer's Eve, in Downtown Phoenix, Arizona, as we were boring a tunnel beneath 2nd Street...for the completion of Interstate 10, the "Inner Loop", and the Mole had bored underneath an old brick Septic Tank...filled with ancient excrement.
Yes. Fortunately I was at street level, monitoring the level of those...oh...how shall we say..."aromatic fluids". The crew, some 57 feet below street level...were not as fortunate...especially after I reported by radio that the level had declined by about a scant six inches.
After that the exponential flow rate increased dramatically and then I reported that the contents were "on their way"
Yes...Writing about shitstorm showers. Exponential decay in action. Yep. It just sort of happens in that fashion.
And unfortunately...I must report once again...IT IS ON ITS WAY.
Spot on Tom, as much as I would like this shit show to be over I can’t help but feel bad for a lot of good folks who will get hurt. Yes, I have prepared for this eventuality as much as I could, but when chaos comes no one will be spared even those who think they have every outcome figured. Yes, they might weather it much better than those who have not prepared but they will be touched by it nonetheless. Sad times indeed.
Also, FUCK U YELLEN and all the Central Bankers!
SOMEBODY CALL PAULSON!!!! We need an even bigger T.A.R.P. stat!!! and a can of Lysol, and a bunch of rope, and lamp posts
and I'd like a cup of coffee and a bearclaw. Thanks, Hank, oh and bring some rope for yourself----yeah to secure the tarp that's right.
Summer of 2007 all over again. Only worser.
The Wealth & Power of the GLobal Status Quo was wrapped around Oil & Gas... as well as the world reserve currency (USA).
So, end of the Status Quo?
- Assault on US Middle Class & US Power
- Or are their Power Networks in place that are isolated from the Damage of the collapse in pricing of Oil?
- Could it be that the .01% will not be hurt as usual and will increase power, control, wealth, status, influence?
Q: We don't see TBTF Banks saying anything, Vichy DC saying anything... the Lawyers aren't saying anything. Doesn't that sound like the US Status Quo will stay in place while Middle Class & Jobs & Savings will take the hit???????????
The US middle-class is the greatest barrier to the One World Economic System and therefore Barry was hired to accelerate the dismantling of the US middle-class...he is doing an excellent job of it and wait; he still has 16 more months and he has made some promises...wait till we have to save their new money making industry goddess "Mother Nature".
It all depends on how spooked the lemmings get. If they start running over the cliff, all is lost for the .01%
New normal markets. Thanks for the stops suckers.
150% return if it goes back to $100, 50% loss if it reaches $20, yet no buyers show up. I blame Elon Musk.
Mmmmm.... Musk.
the fed should just print moar storage
moar for the maggots and less for us is always the answer
Getting ready for the next big downleg in gold.
Gasoline went up 15 cents a litre here today. It was cheaper when crude was $130/bbl.
$2.99 a gallon here in America’s Midwest.
Indiana refiners sabotaged us.
Up almost $.75 in one day in northeast Indiana.
Fuckin' BP AGAIN.
No shit? I've seen that happening around here too. I thought it was just my imagination. Some pumps have $2.49, when others are at $2.30. THE SAME DAY.
some of those have 100% gas with no ethanol. Some small engines can't have ethanol in the gas, and you get better mileage. Ethanol makes gas cheaper because of all the subsidies.
2.25 in Danvers,Ma.
At current levels of oil PPB; gasoline per gallon should be around $2.10-$2.22, but hey there is a fix of $2.69. Use to be that going from regular to mid-grade was an extra dime and from mid to premium was another dime. That is now a $.30 gap despite the draw down. Prices are fixed in many ways.
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Anyone notice there water and sanitation bill has increased by 20-25% this past year? They just say you used more water; not kidding.
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Time to get all the boys to start pissing in the yard & on the trees to save a few flushes.
Yeah, something is askance.
Where is here?
Specchless.
"very, very wrong with the world,"
Elmer Fudd - "Hey...there's something awfully screwy going on around here."https://www.youtube.com/watch?v=U7sG8cw50mQ
How low does the price go once Iranian oil hits the market? $20s?
How low does the price go once we discover we don't need to burn oil, coal, or uranium for energy?
http://www.keshefoundation.org/media-a-papers/keshe-news/376-new-technology-to-free-humanity-2
Scream if you want to go faster.
At this point I will be amazed if we don't collapse BEFORE Labor Day. The plates have stopped spinning. I have no idea what comes next. I stay with Gold because there is nothing else I believe in any more.
Jesus Christ is more precious than all gold; put your trust there and you cannot be disappointed; always a win-win with Him.
https://www.youtube.com/watch?v=NMlv21zGARM
I find JC to be especially precious when his image appears on a slice of toast*.
*thank God for ebay
George Carlin and religion
https://www.youtube.com/watch?v=gPOfurmrjxo
Religion...
An amazing con trick used against gullible humans to control them.
Doesn't matter which one you think of.
You are not very "logical" :-) Crocodile mentioned nothing about religion....Crocodile mentioned Jesus Christ. Most of the 501c3 churches do not tell the truth, and I agree with you that religion is a corporated situation and I myself want nothing to do with it. But the writings involving Jesus Christ, His words, actions, the old testament predicting his coming etc is quite amazing....Find a church that tells its congregation about the book of revelations saying those who call themselves jews are not jews, and I will attend that church. THe Bible expains the so called jewish rothchild bankers very clearly. Find a fault in Jesus' words and share them with me. His words were always of love and who we really are. He tried to let us know we are not the zombies the bankers try to make us be, and the only time he became violent was whipping the money changers..Jesus CHrist taught us that we are all amazing creations of life. Opposite what the bankers teach us.
Your argument relies on the Bible being a truthful and honest document.
I think that's where it fails.
By the way, I'm an atheist, but I have read the bible - both testaments.
Probably why I'm an atheist, it's a truly scary read.
The older I get, the more I realize the primary attribute of atheists.
Lazy atheist.
Without God, you have no rights. They are trying to eliminate God and replace by Government. Without God you have no freedom. God given rights...life, liberty, property. This is why they try to take God out of everything.
The main fault with Jesus's words is that in most cases it's pretty hard to make heads or tails of what the guy was trying to say. Hence we have everybody interpreting the meaning of various goofy stories about virgins and lamps and running out of oil and so forth. I kind of feel that, whatever it was he was trying to say, he should have said intelligibly. I spent many years thinking about the sayings Jesus without ever being able to decipher any clear and definite meaning. When words have no definite meaning, they are gibberish.
It's actually quite straightforward once you put the time into it.
The Holy Spirit is the key.
I understood the story about the virgins when I was 5 years old. If someone was really interested in what Jesus had to say, I would hope they'd ask someone who knows more about it. There are plenty of good translations of the Bible, but there is also the challenge of understanding the cultural context of the time. For instance, when Jesus was asked if he did certain thing in his own name or in the name of God and he said "I Am what I Am" a person might need some background to understand that Jesus was saying that he was God (I Am is what God told Moses His name was) and not just shrugging off the question.
Add Saudi Arabia to the troubled places list.
So is the 50%-plus YoY drop in oil prices about to 'cause' contagion risk concerns for the world?
I sure hope so.
We need something to start popping all these bubbles the CB's have blown.
Bottom tic'd at a 10.00 spread. Hmm.
Skynet says "sell"!
No oil above $50/bbl in my lifetime.
wanna bet?
I'm glad that there are so many commodities out there that they have become cheaper, especially since there seems to be even more money floating around. The opposite would be worse: starvation for most except of course for the 1% of course, but it would probably spell lynching for them.
The lady on the "money news" said it's 'cuz they switchin' to da winter blend.
HIGH PRICED OIL DESTROYS GROWTH According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf
HOW HIGH OIL PRICES WILL PERMANENTLY CAP ECONOMIC GROWTH For most of the last century, cheap oil powered global economic growth. But in the last decade, the price of oil production has quadrupled, and that shift will permanently shackle the growth potential of the world’s economies. http://www.bloomberg.com/news/articles/2012-09-23/how-high-oil-prices-will-permanently-cap-economic-growth
THE END OF CHEAP OIL Global production of conventional oil will begin to decline sooner than most people think, probably within 10 years
Feb 14, 1998 |By Colin J. Campbell and Jean H. Laherrre http://www.scientificamerican.com/article/the-end-of-cheap-oil/
BUT WE NEED HIGH OIL PRICES: Marginal oil production costs are heading towards $100/barrel http://ftalphaville.ft.com/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/
The marginal cost of the 50 largest oil and gas producers globally increased to US$92/bbl in 2011, an increase of 11% y-o-y and in-line with historical average CAGR growth. http://ftalphaville.ft.com/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/
Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html
Sanford C. Bernstein, the Wall Street research company, calls the rapid increase in production costs “the dark side of the golden age of shale”. In a recent analysis, it estimates that non-Opec marginal cost of production rose last year to $104.5 a barrel, up more than 13 per cent from $92.3 a barrel in 2011. http://www.ft.com/intl/cms/s/0/ec3bb622-c794-11e2-9c52-00144feab7de.html#axzz3T4sTXDB5
And the cabal will still keep gasoline prices north of $3/gallon
You may be confusing cause and effect here. Some of the Oil price spikes in the chart were the result of the geopolitical turmoil rather than the cause.
With Lavrov calling the Saudis 'fucking morons' you can expect a Tianjin in the Sands of Araby (somewhere around Gwadar) any day now.
I like the Russians a bit more everyday